The Macroeconomy After Tariffs
What does the macroeconomy look like in the aftermath of tariff changes This paper estimates impulse response functions from local projections using a panel of annual data that spans 151 countries over 1963–2014. Tariff increases are associated wit...
| Main Authors: | , , , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/undefined/631111637243460329/The-Macroeconomy-After-Tariffs http://hdl.handle.net/10986/36630 |
| Summary: | What does the macroeconomy look like
in the aftermath of tariff changes This paper estimates
impulse response functions from local projections using a
panel of annual data that spans 151 countries over
1963–2014. Tariff increases are associated with persistent,
economically and statistically significant, declines in
domestic output and productivity, as well as higher
unemployment and inequality, real exchange rate appreciation
and insignificant changes to the trade balance. Output and
productivity impacts are magnified when tariffs rise during
expansions and when they are imposed by more advanced or
smaller (as opposed to developing or larger) economies;
effects are asymmetric, being larger when tariffs go up than
when they fall. While firmly establishing causality is
always a challenge, the results are robust to a large number
of perturbations to the baseline methodology, and hold using
both macroeconomic and industry-level data. |
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